We experimentally study ways in which social preferences affect individual and group performance under indefinitely repeated relative incentives. We also identify the mediating role that communication and leadership play in generating these effects. We find other-regarding individuals tend to depress efforts by 15% on average. However, selfish individuals are nearly three times more likely to lead players to coordinate on minimal efforts when communication is possible. Hence, the other-regarding composition of a group has complex consequences for organizational performance.

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Keywords Cooperation, Leadership, Relative performance, Social preferences
JEL Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs, seniority issues) (jel M52), Behavioral Economics; Underlying Principles (jel D03), Game Theory and Bargaining Theory (jel C7), Design of Experiments (jel C9)
Persistent URL dx.doi.org/10.1007/s10683-017-9512-9, hdl.handle.net/1765/98260
Journal Experimental Economics
Hernandez-Lagos, P, Minor, D, & Sisak, D. (2017). Do people who care about others cooperate more? Experimental evidence from relative incentive pay. Experimental Economics, 1–27. doi:10.1007/s10683-017-9512-9